Are these the best AI stocks and ETFs to watch?
Artificial intelligence stocks have been attracting a lot of attention from investors. Here are some AI stocks and ETFs to watch, as well as some steps for how to trade or invest in artificial intelligence.
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AI stocks and ETFs: what you need to know about the sector
Artificial intelligence (AI) is a catch-all term to describe machine learning. While it may still feel like a concept from a sci-fi movie, most of us are already using AI in some shape or form. AI helps us to connect with long-lost school friends on Facebook, to filter out spam emails, to tailor our search results on Google, and to help us plan journeys based on real-time traffic reports.
Scores of countries are using machine learning capabilities to introduce new technologies and to streamline existing processes. For example, self-driving cars rely on AI processes, while AI-powered digital health solutions have been used to manage the Covid-19 pandemic. This means that as the self-driving car and digital health sectors grow, the AI sector stands to benefit too.
AI is also a key component in graphics cards and APIs (application programming interface), which can be used to power everything from smartphones to supercomputers. Many established companies have invested heavily in AI in anticipation of an AI boom, which could happen if the world becomes more and more reliant on functional technology and the internet of things.
While the AI sector is still in its infancy, there are signs that it’s starting to mature. The sheer volume of publicly listed AI firms points towards a growing trend, while the creation of bespoke AI-based indices and index-tracking ETFs proves that there is increasing investor interest in the area.
How to trade or invest in AI shares and ETFs
Trading and investing are two different ways to take a position on artificial intelligence shares and ETFs. When you trade, you are making short-term decisions in order to make quick gains in growing markets. When you invest, you effectively take a long-term position in a company or fund in the hope that its value will rise over time.
Follow these steps to trade or invest in AI shares and ETFs:
- Choose whether to trade or invest
- Create an account or log in
- Identify your opportunity
- Carry out your own analysis and research
- Open and monitor your position
Nvidia is one of best-known AI stocks, and it manufactures high-powered graphics chips which have a range of different uses. The company has been at the forefront of the self-driving car revolution, creating its own AI operating system for driverless cars, called Driveworks.
The company was founded in 1993 to create graphics-based computer solutions, primarily in the growing video games market. Over the years, the firm has expanded the use of its graphics chips, using the technology to develop cutting-edge machine-learning APIs.
As a result, Nvidia has been an early player in emerging markets such as self-driving cars, electric vehicles, and cryptocurrency mining.
Micron began as a semiconductor design company in the 1970s, ultimately developing high-powered memory chips which can be used to provide AI solutions to smartphones and electric cars.
In 2019, Micron acquired AI hardware and software startup Fwdnxt and launched the Micron Deep Learning Accelerator. Micron’s memory chip technology, paired with Fwdnxt’s AI capabilities, means that the company can develop the sort of deep learning solutions that are required for data analytics in emerging technologies, such as self-driving cars.
3. Sensyne Health
Healthcare is the next frontier of the AI market, and Oxford-based healthtech company Sensyne Health is a great way to gain exposure to a home-grown AI stock. Working with NHS trusts, the company uses AI to gather and analyse evidence from large databases of anonymised patient data. This data is then used to develop digital health products.
For example, earlier this year, Sensyne Health launched an AI algorithm which provides an hourly risk forecast of the future demand for ventilators and intensive care treatment in hospitals, based upon an analysis of clinical data on Covid-19 patients. The company recently began to roll out its digital health products in the US – a sign of its ambitious growth plans.
1. WisdomTree Artificial Intelligence UCITS ETF
The WisdomTree Artificial Intelligence UCITS ETF aims to mirror the performance of the NASDAQ CTA Artificial Intelligence & Robotics Index. This index covers a wide spectrum of AI-focused and AI-adjacent firms, including companies which act as AI enablers, engagers or enhancers.
This means that investors in the ETF can effectively stretch one investment across multiple companies, offering exposure to different corners of the AI market. As well as big hitters such as Nvidia and Baidu, WisdomTree Artificial Intelligence UCITS ETF tracks rising stars in the AI world.
2. Robo Global Artificial Intelligence ETF
The Robo Global Artificial Intelligence ETF was launched in May 2020 to track the ROBO Global Artificial Intelligence Index – an AI-focused index that was created by Robo Global in 2013. Like the WisdomTree Artificial Intelligence UCITS ETF, this fund offers access to a wide range of companies which work with AI in some form.
Why do people trade and invest in AI stocks and ETFs?
- Trading and investing in AI stocks and ETFs offers a chance to be part of an exciting new growth industry
- There are endless ways to use machine learning in our day-to-day lives
- AI is an incredibly innovative technology which is constantly progressing
- AI stocks will benefit from the growth of related markets, such as self-driving cars and smartphone manufacturing
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The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
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